The Formula Institutional Investors Use to Beat the Market w/ Adam Parker

**Adam Parker** (0:00)
The main feature of this equity market, LG, the main feature has been the penalty for missing has been way harsher than the reward for beating.

**LG Dussett** (0:06)
What's up, everybody? It's LG Dussett here, and welcome to Milk Road AI, the daily AI show that just needs one more big dip to finally get into those memory positions. I promise I'll buy this time, you guys. Today is July 5th, 2026, recording on June 29th. Listen, you may be new to the AI stock game, or you may have been watching it for a few years now. But almost no one we know carries the experience and perspectives as our guest today when it comes to larger market. Adam Parker is the founder and CEO of Trivector Research. He's a CNBC contributor, former Morgan Stanley US Equity Strategy, the ex number one institutional investor, ranked semiconductor analyst, and has deep experience in both the sell side and buy side of equity work. We got some real experience coming on the show today. He'll tell us all about that and how much further this AI trade can really go. Before we get into it, on our end at Milk Road Pro, we made 12 trades last week. Yes, actually, our analysts spent the week buying some healthcare software and even more of the bottleneck stocks. All this after picking up Micron, Nebius and Bloom Energy earlier this year, and they are not done. See what we're buying next for just a dollar at Milk Road Pro. Today's episode is brought to you by BitGet, Stocks 2 with real liquidity and real dividends. Here he is, Adam. What's up, man? Welcome to the show.

**Adam Parker** (1:16)
Thanks for such a kind intro, LG. I'm looking forward to the conversation.

**LG Dussett** (1:20)
Was that accurate? Did I nail your accolades? I feel like there's a lot to put in there, but I feel it's all true.

**Adam Parker** (1:27)
All I heard is Adam's old. That's all.
I blacked out after a while, but no, thanks. Yeah, it's right. I spent my whole career researching stocks, so I think you pretty much hit that.

**LG Dussett** (1:42)
I feel like you're also going to tell us a bit today about how maybe this is unlike any period that we've seen it, even in your career.
One thing that I've seen you discuss on other shows, and I feel is, I guess, kind of an analogy that we hear a lot about these days, is which inning of the ballgame are we in when it comes to the AI trade? I feel like you have kind of a diversified answer for that. So Adam, where are we at?

**Adam Parker** (2:07)
I think it really depends on, and I'll answer the question, so I don't want you to think I'm word saluting you, but it really depends on what you mean. Meaning, do you mean AI revenue? Do you mean AI productivity? Do you mean earnings? Do you mean the stocks? Do you mean the whole S&P 500, which is, let's call it 60% in AI ETF? I mean, it really depends on what you mean, but I'll take the tenor of the question and say, seventh inning on stocks, third inning on fundamentals or something like that.
But I think it really, there's a long way to go on the fundamentals and the stocks are anticipatory, certainly by some horizon. So, but you know, but let's sandpaper that some, that sculpture some if you want.

**LG Dussett** (2:49)
Okay, so seventh inning on stocks, third inning on fundamentals. What do you mean by fundamentals? So we're early in the fundamentals matter game. Is that related to the S&P, to AI?

**Adam Parker** (3:00)
Yeah, I mean, look, we did some work of two months ago.
We looked at the top 3000 public US equities. We used a large LOM and we said, who has meaningful AI revenue?
We defined meaningful as 5% or more of their current revenue or a new product announcement that we swept from natural language processing on their websites. And we found 262 of the top 3000 companies, a little less than 9%, currently have meaningful AI revenue in the US equity market. Yeah, market cap wise, that's a lot more because all but the great aid, except for Apple are currently meaningful. So it's half the market cap or whatever, but still only 9% of the companies. I imagine that'll be a bigger number. And then in terms of earnings, most companies have guided all along, even the last two years plus, that they would start seeing AI productivity beneficiary stuff, the margin expansion more in 27 and 28 So I think when I say fundamentals, I mean more like on the margin and earnings productivity front, that's probably much more 27, 28 business.